Existing home sales fell slightly in January for the 12th straight month, according to new data out today from the National Association of Realtors.
Year-over-year, they’re down almost 37%. Home prices are still rising, though more slowly than they have been for much of the last couple of years. Additionally, mortgage rates are still high, too.
What does all this portend for the spring housing market?
The housing market always cools in the winter. Lawrence Yun, NAR chief economist, said the drop in home sales from December to January this year was modest — less than 1% — “possibly suggesting that the bottoming in home sales may be occurring either now or very soon.”
Prices aren’t dropping nationally yet. But they’re not rising that much anymore either.
“Which implies that essentially half the country is experiencing some modest price decline, while the other half of the country is continuing to see some modest price increases,” Yun said.
Home prices are still increasing in the Midwest and the South, while staying steady in the Northeast and dropping in the West.
“We’re at a very interesting point in the U.S. housing market where many people feel like the 2023 could really go either way,” explained Igor Popov, chief economist at Apartment List. He said the combination of higher home prices and higher mortgage rates has made it tough for buyers and sellers.
“Many sellers, potential sellers, have a bit of a golden handcuffs problem where even if they might want to move this year, they may have locked in a 3% mortgage rate, and getting that same home or a better home at a six-plus-percent mortgage rate just may not be feasible at all,” Popov said.
That’s one big reason inventory is still low. However, it’s beginning to creep up.
“The housing market is a lot less competitive right now,” said Daryl Fairweather, chief economist at Redfin. She said that’s the good news for people who are committed to buying right now.
“If you can get past the hurdle of qualifying for a loan, you’re going to be more likely to get your offer accepted,” she explained. “You’re not going to face competition, most likely.”
That is, if people can find homes they can afford.
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